FSHO is the first exchange to be ordered to close up shop.

To say that the Japanese government has been forgiving towards cryptocurrency exchanges may be too strong of a statement–but not by much.

While the Japanese government has increased the vigilance and strictness with which it enforces the regulations it has set for cryptocurrency exchanges, the government has never gone so far as to actually deny an application for an operational license. Instead, the government has given exchanges who continually fail to meet the application’s standards the opportunity to gracefully withdraw their applications and end their operations on their own accord.

FSHO Had Already Received Two Business Improvement Orders

The exchange at hand, FSHO, has been allowed to operate in recent months while its application has been under review by the Japanese Financial Services Agency. FSHO is so far the only crypto exchange to have received two business improvement orders from the FSA earlier this year. Both times, FSHO was ordered to temporarily suspend its operations until certain issues were resolved.

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According to a report from Nikkei, the Japanese Financial Services Agency’s “decision follows the ministry’s conclusion that Yokohama-based FSHO lacks the necessary systems to operate its business…by barring an exchange operator that it has found to be substandard, the agency aims to demonstrate its determination to re-establish a sound currency trading environment in Japan.”

The List of Shutdowns Grows

In addition to FSHO, at least seven other exchanges have said that they will be closing up shop.

The FSA originally began ramping up enforcement of exchange regulations following the $530 million Coincheck hack that took place earlier this year. In the wake of the hack, FSA agents began conducting in-person inspections of exchange offices.

So far, 16 exchanges have successfully registered with the FSA. However, “some operators see little prospect of meeting the agency’s standards,” according to a Nikkei report published in late March.